FOOTNOTES:

Number of Men Employed in Central Pacific Construction, 1864-69, and Rate of Pay

Year Number of Chinamen Rate of pay Number of White Men Rate of pay

1864 Very few 1,200 $ 30 a month

1865 7,000 $ 30 a month 2,500 —30 ”—”——

1866 11,000 —30 ”—”—— 2,500–3,000 —30 ”—”——

1867 11,000 —30 ”—”—— 2,500–3,000

1868 5,000–6,000 2,000–3,000

1869 5,000 1,500–1,600

“July 24th, 1874.

Dear Cohen:

Regret on your own account that you are so ill. Send Mr. Yost over particularly to report, and carry this message. Michael Reese is willing to commence suit as stockholder. Please transfer to him 150 shares of your stock in the California Pacific. Hoping to hear a more favorable account of your health, I remain,

Yours truly,

Stanford.”

The inference from this letter is, of course, that the Reese suit was brought at Stanford’s own instance.

When the railroad secured title it offered to sell this occupied land to the parties who had settled upon it, but at prices which were much above those current for unimproved farm land. That is to say, the railroad asked from $11 to $35 an acre, instead of the customary $2.50 to $5 an acre. The settlers understood from this that the company was trying to make them pay for improvements which they themselves had made, and resorted to active opposition. In 1876 the settlers petitioned Congress to restore a portion of the land grant in question to the public domain, on the ground that no railroad had ever been constructed along it.

In 1881 the railroad attempted to take forcible possession of two pieces of the disputed land. There was resistance, and in the shooting which followed, eight men were killed, including six settlers. This was the “massacre.” There seems to be no question but that the railroad possessed legal title to the Tulare County property. The weakness of its position lay in the fact that it was attempting to build a railroad in one place and to secure a land grant in another—a procedure never contemplated by Congress, and one not unlikely to lead to hostile legislation. Eventually the railroad title was sustained, and the land sold by the company, though at reduced prices.

It should be observed that a great deal of the mileage now owned by the Southern Pacific Railroad was not originally built by that company, but by or for small separate companies, most of them organized by the Huntington group, which were later consolidated with the parent corporation. The complete list of these consolidations is as follows:

October 12, 1870. Consolidation of the Southern Pacific Railroad Company, the San Francisco and San José Railroad Company, the Santa Clara and Pajaro Valley Railroad Company, and the California Southern Railroad Company.

August 19, 1873. Consolidation of the Southern Pacific Railroad Company and the Southern Pacific Branch Railroad Company.

December 18, 1874. Consolidation of the Southern Pacific Railroad Company and the Los Angeles and San Pedro Railroad Company.

May 14, 1888. Consolidation of the Southern Pacific Railroad Company, the San José and Almaden Railroad Company, the Pajaro and Santa Cruz Railroad Company, the Monterey Railroad Company, the Monterey Extension Railroad Company, the Southern Pacific Branch Railway Company, the San Pablo and Tulare Railroad Company, the San Pablo and Tulare Extension Railroad Company, the San Ramon Valley Railroad Company, the Stockton and Copperopolis Railroad Company, the Stockton and Tulare Railroad Company, the San Joaquin Valley and Yosemite Railroad Company, the Los Angeles and San Diego Railroad Company, the Los Angeles and Independence Railroad Company, the Long Beach, Whittier and Los Angeles County Railroad Company, the Long Beach Railroad Company, the Southern Pacific Railroad Extension Company, and the Ramona and San Bernardino Railroad Company.

April 13,1898. Consolidation of the Southern Pacific Railroad Company, the Northern Railway Company, the Northern California Railway Company, and the California Pacific Railroad Company.

March 7, 1902. Consolidation of the Southern Pacific Railroad Company (of California), the Southern Pacific Railroad Company (of Arizona), and the Southern Pacific Railroad Company of New Mexico.

Net Profits and Rentals Central Pacific Railroad, 1885-93

Period Net Profits Central Pacific Railroad Company Rental Paid to Central Pacific Railroad Company Excess of Rental over Net Profit

April to December, 1885 $1,482,033 $1,482,033 ..........

1886 1,324,998 1,324,998 ..........

1887 1,086,733 1,200,000 $113,267

1888 962,830 1,360,000 397,170

1889 1,035,418 1,360,000 324,582

1890 999,223 1,360,000 360,777

1891 2,144,425 2,144,425 ...........

1892 861,874 1,360,000 498,127

1893 784,717 1,360,000 575,283

————— ————— —————

Totals $10,682,251 $12,951,456 $2,269,206

═══════ ═══════ ═══════

Brice Report, 53d Congress, 3d Session, January 28, 1895 (Senate Report, No. 830, Serial No. 3288).

It is extraordinary that a man in Colton’s position with his intimate knowledge of the precarious condition of Central Pacific finance should have allowed that railroad to declare a 4 per cent dividend in October, 1877, great though his personal necessities may have been. This was, however, done. In reply to a letter from Huntington criticizing this action, Colton later wrote:

“I never had the least intimation of objecting to the dividend until some time after it was declared. Governor Stanford informed me that you had telegraphed him, advising relative to this October dividend. We discussed it some time afterward in the Board meeting and found the whole matter of dividend had been written up in the books, and had gone so far before it had been brought before the Board that it was considered best to let the matter stand as it was.... I did not give the matter any attention outside of the Board meeting, for I felt it was a matter that Governor Stanford was personally attending to.

“I do not, however, see the matter in just the light you do, and think so few will know of it that it cannot hurt us in Washington, for if you who are one of the largest stockholders, have not found it out, I do not see much show for outsiders. That there were ample surplus earnings to declare it there is no doubt. So it was a question of policy.... I would think in a business way the Government would be glad to see us doing well and prosperous, and evincing ability to pay dividends and all of our debts.” (Colton case, pp. 7533-34, Colton to Huntington, November 24, 1877.)

“A gentleman of Placerville called upon Mr. Charles Crocker, of the railroad company, in San Francisco last Saturday, to ascertain just what we might calculate upon in reference to the extension of the railroad from Shingle Springs to Placerville. He reports that Mr. Crocker conversed freely on the subject, and with an appearance of perfect candor. He said emphatically that his company would not build or extend any branch roads under existing conditions as to uncertainty of action by the Railroad Commission, and the apparent state of public opinion as manifested in the Legislature and portions of the public press. He says that if the Commission intends to make sweeping reductions on the branch roads, such action would make these roads valueless, and he is not disposed to build roads to be thus destroyed. In answer to a direct question, with a full understanding that it was to be reported to our people, he said that if the Robinson suit were settled, and the position of the Commission ascertained as disposed to non-interference with the branch roads, his company was anxious to and would immediately extend the road to this place.”

Products Annual Receipts Annual Exports

Wheat 225,000 tons 200,000 tons

Barley 30,000 ” 10,000 ”

Oats 15,000 ” 2,500 ”

Corn 5,000 ” 1,000 ”

Hay 40,000 ” 1,000 ”

Potatoes 37,500 ” 10,000 ”

Beans 3,600 ” 1,000 ”

Hops and broom corn 3,600 ” 1,000 ”

Beets, carrots, tomatoes, parsnips, peas, cabbages, melons, squashes, etc. 40,000 ” 500 ”

Butter and cheese 10,000 ” 500 ”

Brandy and wine 6,000,000 gals. 4,000,000 gals.

Fruits, dried and fresh 20,000 tons 500 tons

Beef, mutton, and pork 6,000 ” .........

Poultry and eggs 12,000 ” .........

Wool 7,500 ” 4,000 ”

Hides 168,000 ” one-half

“Q. Are you sufficiently acquainted with the commercial community of Stockton to know whether they have any reluctance in making complaint ... before any Court of justice, or in going before the Railroad Commissioners, or an investigating committee? A. All I know about it is the impressions I have drawn from what I have heard.

“Q. To what effect? A. I would be very reluctant to come before this body and state what firm I belong to, or represent, for fear that the railroad might chastise me for it, or my firm.

“Q. Is that opinion generally shared among the merchants? A. As I understand it, that is the general opinion.

“Q. What do you mean by the word ‘chastise’? A. They might take our contracts away from us.”

This testimony was corroborated by at least one well-established merchant in San Francisco, who declared before the same Senate committee that business men in San Francisco were afraid to testify against the railroad for fear that their contracts might be broken. (Testimony before the Senate Judiciary Committee of the Legislature on Assembly Bill No. 10, 1884.)

Year ended June 30 Number Tonnage

1867 103 110,721

1868 119 124,504

1869 139 153,784

1870 111 126,726

1871 53 66,289

1872 63 70,956

1873 87 104,586

1874 62 83,248

1875 75 110,071

1876 88 124,793

1877 86 124,746

1878 68 104,544

1879 57 92,683

1880 53 86,332

1881 55 89,097

1882 67 104,157

1883 71 118,494

1884 48 84,196

“I will state some facts about the attempt that was made to ship ores from here. Up to 1887 little or no assorted gold ores had been shipped. It was so new an enterprise that it was not classified in freight rates of the railroad company. The company was asked to establish rates, which it did—at $50 per car from Redding to San Francisco. This was satisfactory to the miners. We commenced to ship, and in a few months were sending down over 100 tons per month and had hopes of building up a permanent business. All at once, without notice, the freight was increased to $73 per car, and in a short time it was again raised, this time to $95 per car, and lots of less than one car were raised from 48 cents to 76 cents per 100 pounds. I went to San Francisco to see why this was done, and after considerable trouble gained an audience with an official at Fourth and Townsend streets. I spoke to the official about the advance on ore freight rates. His reply was: ‘Why, you are sending down ore that would make a prince rich. We can’t pull high-grade ore on low-grade rates.’ I reminded him that it was billed at a valuation of $100 per ton and that the railroad company’s responsibility ended there, and that we wished rates on all grades of ore, as there were so many values we could not classify them.

“Then he made me the proposition that there be no regular rates established, but to ship to the smelter for one month and then bring my returns and he would take out what he might think a recompense for pulling these values over the road. For cheek as a business proposition I think this stands pre-eminent. Of course it was rejected, and I was given rates as follows: Anderson, $71; Redding, $73 per car.” (San Francisco Examiner, May 8, 1893.)

When the Interstate Commerce Act was passed in 1887 the transcontinental carriers agreed to grade eastbound rates back to the Pacific Coast. Under tariffs issued April 5, 1887, Missouri River rates were applied for about 350 miles west of the river, from which point they gradually decreased to Denver. The Denver rates were applied from Denver to a point near Green River, over 300 miles west from Cheyenne. From Green River the rates again decreased gradually to the Pacific Coast. The tariff of April 5 was published in order to comply with Section 4 of the Interstate Commerce Law, and it was superseded by other tariffs in April and May, 1887, by permission of the Interstate Commerce Commission. (Martin v. Southern Pacific Company, 2 I. C. C. R. I [1888].)

In later years transcontinental rates to interior points were not uniformly built by combination upon the terminals. In many cases, even in westbound rates, the terminal rates served as maxima beyond which intermediate rates were higher than to terminal points, but not by the full extent of the local back. Thus on the Central Pacific in 1902 the company named class rates to intermediate points which acted as maxima to all points, which meant that when the specified intermediate rate was less than the terminal plus the local back, the lower rate prevailed. Nor must the influence of the Interstate Commerce Commission in reducing intermediate rates be left out of account. Yet it was the conclusion of this same commission as late as 1902, that the point where the direct rate from the East was at least as high as the sum of the terminal rate and the local rate from terminal to intermediate destination, was on the average 300 miles east of the Pacific Coast, and in some instances several times that distance, a fact which is sufficient to characterize the system as a whole.

The Traffic Association was said to be, under its constitution and by-laws, a state institution, organized to promote the welfare of the whole state. The executive committee did not believe that San Francisco should be made the sole terminal even were this possible. The city would assume its proper and legitimate place not as the oppressor, but as the protector of every industry in the state, provided free competition and equally adjusted local rates could be secured. (Ibid., December 18, 1892.)

“As to building a railroad to Salt Lake, I certainly have no objection to other people doing it. I should very much dislike to do it myself. I do not believe it would be for the interest of San Francisco merchants to build it; hence I do not think it will be built. A good railroad from San Francisco to Salt Lake, with good terminals, as good a road as the Central Pacific, would cost at least $50,000,000. Of course, a road can be built for a much less sum, but such a road would not compete with the present line, for certainly the present rates are not as much as it would cost to haul the tonnage over a cheap line that could be built for much, if any, less than the figure named. When the Central Pacific Railroad was built I urged the moneyed men of San Francisco to take an interest with us on exactly the same basis as I and my associates hold our interests. But no one here would take an interest. If they would not take an interest then when every man, woman, and child in the State wanted a road so that they could go East and see the old folks at home, they would hardly be likely to take it now, with at least seven lines across the continent, charging rates of fare and freight very, very much less than they were when the first road was built, or than they expected these rates would be when the first road was inaugurated.” (Ibid., September 20, 1892.)

The San José delegation which came to San Francisco in March said that $148,000 had already been secured for the new road in their district, that $200,000 was in sight, and that $300,000 in subscriptions could be obtained with a guaranty of shipments by the new route from the large fruit packers, business men, farmers, and horticulturists. They added that rights-of-way, 75 per cent of which would be free of cost to the company, and also terminal facilities in San José would be provided. (Ibid., March 27, 1895.)

It is of some interest to recall that when the decision was made in favor of Stockton, her representatives had difficulty in making their promises good. It was remarked at one time that apparently one of the things most needed to help on the era of progress in California was a number of judiciously selected funerals—presumably of opponents to the new developments.

“My views do not coincide with yours in regard to the reasons actuating the promoters of the railroad. Popular opinion in California believed that the domination of one railroad greatly retarded the progress of the state and it was the feeling that the prosperity of the state would be very greatly increased if competition could be provided. As a possible means of obtaining such competition resort was made to water competition and a steamship line was organized to handle freight via the Isthmus. This line was maintained until the money raised had been absorbed and it had been practically demonstrated that such a line could not pay. The public was, therefore, eager for any other competition that might present itself. It was the thought of the projectors that a local line should be built which might ultimately, if opportunity offered, become part of a transcontinental line. The Santa Fé, however, was not in a position to do anything, as it was at that time in a Receiver’s hands. It was, however, the nearest railroad and it, therefore, seemed wise in projecting a new road branching from San Francisco to so locate it that it could later become part of the Santa Fé if that road desired an entrance to San Francisco. Most of the people who subscribed did so with the idea of providing competition and not with the idea of making money out of the investment.... By the time the road reached Bakersfield it became evident to the Directors that the road could not successfully compete with the Southern Pacific, because while for the time the people in the valley were giving the road all the freight that came from San Francisco, they were not able to turn the freight coming from the east over the Valley Road, the Southern Pacific refusing to make joint rates. The consequence was that the Valley Road had to depend exclusively on local business, and it was felt that in time even this would drop off materially by reason of the competitive methods of the Southern Pacific. Mr. Spreckels expressed the case in the following manner: It was not possible for the Valley Road to exist unless it became a transcontinental road and California could not raise money enough to make it such. The Santa Fé, by an extension to Bakersfield, could make it a transcontinental road and offered to buy a controlling interest.”

Year Month Per Cent Amount

1873 September 3 $1,628,265

1874 August 5 2,713,775

1875 April 4 2,171,020

1875 October 6 3,256,530

1876 April 4 2,171,020

1876 October 4 2,171,020

1877 April 4 2,171,020

1877 October 4 2,171,020

1880 February 3 1,628,265

1880 August 3 1,778,265

1881 February 3 1,778,265

1881 August 3 1,778,265

1882 February 3 1,778,265

1882 August 3 1,778,265

1883 February 3 1,778,265

1883 August 3 1,778,265

1884 January 3 1,778,265

1888 February 1 672,755

1888 August 1 672,755

1889 February 1 672,755

1889 August 1 672,755

1890 February 1 672,755

1890 August 1 672,755

1891 February 1 672,755

1891 August 1 672,755

1892 February 1 672,755

1892 August 1 672,755

1893 February 1 672,755

1893 September 1 672,755

There were no dividends declared between September, 1893, and the reorganization of the Central Pacific in 1899.

United States Six Per Cent Currency Bonds Issued to Central Pacific Railroad Company

Date Issued Maturity of Bonds Interest Commenced Amount

May 12, 1865 Jan. 16, 1895 Jan. 16, 1865 $1,258,000

Aug. 14, ” ” 16, ” Aug. 14, ” 384,000

Oct. 16, ” ” 16, ” Oct. 16, ” 256,000

Dec. 11, ” ” 16, ” Nov. 29, ” 464,000

Mar. 6, 1866 ” 1, 1896 Mar. 6, 1866 640,000

July 10, ” ” 1, ” July 10, ” 640,000

Oct. 31, ” ” 1, ” Oct. 29, ” 320,000

Jan. 15, 1867 ” 1, 1897 Jan. 14, 1867 640,000

Oct. 25, ” ” 1, ” Oct. 25, ” 320,000

Dec. 12, ” ” 1, ” Dec. 11, ” 1,152,000

June 10, 1868 ” 1, 1898 June 9, 1868 946,000

July 11, ” ” 1, ” July 10, ” 320,000

Aug. 5, ” ” 1, ” Aug. 4, ” 640,000

” 14, ” ” 1, ” ” 13, ” 1,184,000

Sep. 12, ” ” 1, ” Sep. 11, ” 1,280,000

” 21, ” ” 1, ” ” 19, ” 1,120,000

Oct. 13, ” ” 1, ” Oct. 12, ” 1,280,000

” 28, ” ” 1, ” ” 26, ” 640,000

Nov. 5, ” ” 1, ” Nov. 3, ” 640,000

” 12, ” ” 1, ” ” 11, ” 640,000

Dec. 5, ” ” 1, ” Dec. 5, ” 640,000

” 7, ” ” 1, ” ” 7, ” 640,000

” 30, ” ” 1, ” ” 29, ” 640,000

Jan. 15, 1869 ” 1, 1899 Jan. 13, 1869 640,000

” 29, ” ” 1, ” ” 28, ” 640,000

Feb. 17, ” ” 1, ” Feb. 17, ” 640,000

Mar. 2, ” ” 1, ” ” 17, ” 1,066,000

” 3, ” ” 1, ” Mar. 2, ” 1,333,000

May 28, ” ” 1, ” May 27, ” 1,786,000

July 15, ” ” 1, ” ” 27, ” 1,314,000

” 16, ” ” 1, ” July 15, ” 268,000

Dec. 7, ” ” 1, ” ” 16, ” 1,510,000

Jan. 2, 1872 ” 1, 1898 Nov. 28, 1868 4,120

—————

Total $25,885,120

Jan. 24, 1867 Jan. 1, 1897 Jan. 26, 1867 320,000

Sept. 1, 1869 ” 1, 1899 Sept. 3, 1869 320,000

Oct. 29, ” ” 1, ” Oct. 28, ” 1,008,000

Jan. 27, 1870 ” 1, ” Jan. 22, 1870 322,000

” 8, 1872 ” 1, ” ” 22, 1872 560

—————

Total $1,970,560

Undoubtedly many of the bonds listed were disposed of at a considerable discount. Subsidy bonds to the amount of $4,922,000 had been issued by the government to the Central Pacific by October 25, 1866, and had been sold for $3,546,478. The subsidy bonds (currency sixes) were listed on the New York Stock Exchange, but there were few, if any, sales until 1868. Not a single transaction in these bonds was recorded for the year 1867. In 1869, however, the bonds went above par, the average sale price for the year being 108⅛. (United States Pacific Railway Commission, pp. 4682-83.)

Owing to the protests of the Pacific railroad companies at the low rates of interest earned by the sinking funds, considerable amounts remained uninvested between 1882 and 1886. The following table shows the cash uninvested in the Treasury to the credit of the Central Pacific Railroad Company for a series of years:

Date Amount

June 30, 1882 $527,886.53

”—30, 1883 844,652.13

”—30, 1884 1,089,159.75

”—30, 1885 2,020,900.13

Dec. 31, 1886 2,345,984.21

”—31, 1887 76,905.49

June 30, 1889 2,766.14

No interest was earned on these uninvested balances. After 1886, with the single exception of the year 1895, the uninvested portion of the sinking fund was negligible. (Annual Reports of the Commissioner of Railroads, 1882-89.)

“Senator Ransom voted for the Thurman bill. He came out and said ‘Mr. Huntington, I voted for that bill. I knew I was wrong.’ He said, ‘I ought not to have done it.’ Said I, ‘Senator Ransom, I pity you.’ Said he, ‘What do you say?’ Said I, ‘Senator Ransom, I said and I repeat it for I do really pity you.’ I turned on my heel and left him. Now there are a great many men in just that kind of a way; they don’t dare to vote according to their convictions; they are afraid of what other people think of their acts....”

———·······

“I know old Thurman well. He expected to be President of the United States by passing the Thurman Act, but he was not honored of course. I don’t believe he was in earnest. I don’t believe he thought the Act was proper. It was a false contract. There was no warrant in law or equity. He turned demagogue for political purposes; ... I think Thurman is a pretty good liar; lying was his best forte. He is an impressive speaker; he always seems to be so in earnest.” (Huntington manuscript, p. 24-25, 76-77.)

It may throw some light upon the attitude of the Huntington group toward the Thurman Act to remember that the moneys in the sinking funds which the Central Pacific established for the retirement of its own mortgage securities were, at least in part, loaned to the Western Development Company, and used by this company in railroad building in southern California. This was, of course, an ideal arrangement from the point of view of Huntington and his friends.